A wonderland for start-ups

CHOI JI-YOUNG
The author is the head of the industry team at the JoongAng Ilbo.

The start-up market in Southeast Asia is brewing to the boiling point. It has been gobbled up by Chinese IT capital — Baidu, Alibaba and Tencent. Alibaba invested over $4 billion to the largest e-commerce platform Lazada after it took up management control for $1 billion in 2016. It also led a $1.1 billion investment in Tokopedia, an e-commerce platform based in Indonesia. Tencent has invested in Singapore-based gaming and shopping company Sea, Indonesian ride-hailing start-up Go-Jek, and made equity investment in ABC360, an online English learning start-up from the Philippines. According to a McKinsey report, Asia drew 41 percent of global investment in start-ups, of which 70 percent came from Asian peers.

Chinese capital has been eager in its push in the Southeast Asian market because, for one, it is home to 650 million people whose average age is 29. Smartphone penetration has been fast and the market is still cash-rich as credit card spending is yet to become commonplace, according to CB Insights. Ethnic Chinese merchants across Southeast Asia also serve as a strong asset.
Korean capital led by Kakao, Mirae Asset and Hyundai Motor has been investing in Southeast Asian start-ups, but it is no match to Chinese capital.

Young South Koreans have entered Southeast Asia and started e-businesses focused on Korean beauty and fashion products backed by Korea’s edge in logistics and human management. They chose to directly start businesses specifically for the market. Founders were born in 1986 and 1987.

They have little help from the Korean government and instead must rely on support from local institutions. If Korean start-ups burgeon in Southeast Asia, research and development activities as well as exports could be added. The odds of Korean start-ups succeeding in Southeast Asia would be greater than in Silicon Valley. The government must turn its attention to Korean ventures starting businesses overseas.

JoongAng Ilbo, Dec. 11, Page 30